Affymetrix expects the acquisition of eBioscience to:
• Create significant new commercial opportunities in the key post-genomic applications of immunology, oncology, cell biology, stem cell biology, and diagnostics
• Diversify the Company's revenues to complement its genomics franchise
• Augment the Company's growing business in molecular diagnostics
• Expand the Company's product portfolio to include multicolor flow cytometry reagents and a broad spectrum of reagents for the analysis of cytokines, growth factors and other soluble proteins
• Enhance the operational and new product opportunities for Panomics RNA and protein analysis products
• Leverage the commercial capabilities of both companies to generate new opportunities for growth
"The acquisition of eBioscience is transformational for our business, and we are enthusiastic about the opportunities it creates," said Dr. Frank Witney, president and chief executive officer of Affymetrix.
"With eBioscience, Affymetrix will significantly expand its addressable markets by adding an industry-leading portfolio of cell-based and immunoassays. These new products are a critical part of our customers' workflow in our key target markets of translational medicine, oncology, and immunology.
We believe that these markets represent a nearly three-billion dollar annual opportunity, which will put Affymetrix on a solid path to sustained growth and profitability. We look forward to welcoming the eBioscience team to the Affymetrix family."
"This transaction places Affymetrix at the forefront of immunology and oncology, two of the fastest growing segments of molecular and translational medicine," said Dr. Stephen P.A. Fodor, founder and chairman of Affymetrix. "eBioscience complements our traditional businesses of genomics and cytogenetics, and dramatically strengthens our foundation in molecular diagnostics."
"The combination of Affymetrix and eBioscience has significant benefits," said Tim Barabe, executive vice president and chief financial officer of Affymetrix. "With 2011 sales expected to exceed $70 million, gross margins in excess of 70% and EBITDA margin of approximately 30%, eBioscience makes Affymetrix a much stronger company, both operationally and financially. The purchase price represents approximately 4.5 times 2011 revenue and 14 times 2011 EBITDA."
The transaction will be funded using a combination of roughly 50% cash-on-hand and 50% committed debt to avoid dilution and maximize value to shareholders.
Affymetrix has obtained a fully underwritten senior secured financing commitment in the amount of $190 million (including a $20 million revolving credit facility) led by administrative agent GE Capital, Healthcare Financial Services and including, as lenders, Silicon Valley Bank, CIT Healthcare LLC and CIT Bank. Affymetrix will be required to retain cash-on-hand of approximately $95 million to cover its outstanding convertible debt that can be put to the Company in January of 2013. GE Capital Markets, Silicon Valley Bank and CIT Capital Securities LLC will serve as joint lead arrangers and bookrunners for the transaction.
Affymetrix, which is headquartered in Santa Clara, expects to maintain eBioscience's management team and operations in San Diego.
Houlihan Lokey, Inc. is acting as exclusive financial advisor to Affymetrix and Davis Polk & Wardwell LLP is acting as legal counsel to Affymetrix in the transaction. Jefferies & Company, Inc. is acting as exclusive financial advisor to eBioscience and DLA Piper LLP is acting as eBioscience's legal counsel in the transaction.